Whyalla nervously waits for steelworks sale, blast furnace fix

On and off for the past five months, a thick plume of steam has puffed out of the Whyalla steelworks' chimney stack.

At a glance, the steam appears to signify a healthy blast furnace at work.

But Whyalla locals, many of whom work at the steelworks, used to work there, or know someone who does, recognise the plume is, in fact, a symptom of an aging furnace teetering on the brink of collapse.

"It shows that it (the blast furnace) is not actually going," former steelworks worker Marty Hilton explained.

"When it's running, there's very little (steam) that comes out.

"If you're up close you can see it, but no smoke or anything like that."

The fact that the opposite is currently true, and has been for months, has left the seaside city in a rather precarious position.

Whyalla relies on its steelworks and its steelworks relies on its blast furnace.

With the latter offline, the fate of about 400 steelmaking jobs, hundreds more contractor roles, the city's economic prosperity, and Australian steelmaking more broadly is unknown.

"The furnace is like that; once it gets in trouble it takes a lot to get it out of trouble," Mr Hilton said.

"I think if they did shut it down, it would be because it was absolutely hopeless to go any further, but I think if there's any flicker of life, they'll keep going."

As Whyalla locals hold out hope for that flicker of life, they also wait to find out which company will take over the running of the steelworks.

The South Australian government forced the plant into administration last year, with the previous owner, GFG Alliance, owing millions of dollars to creditors and the government.

Indian company Jindal Steel and Australian-owned M Resources have been announced as the final two bidders, with KordaMentha administrator Sebastian Hams previously saying he was confident the sale would be completed by the end of this month.

But SA Treasurer Tom Koutsantonis told ABC News yesterday he was not sure that would be the case.

"I don't know if it will be this month, but there will be a sale process," he said.

"We've got two extraordinary bidders who are slugging it out for it, we've got nearly $2 billion worth of money on the table for whoever's successful, and we're funding the administration."

'We're too big to fail'

In the meantime, Whyalla is in limbo, a feeling the city knows all too well.

One of the first big knocks was the end of shipbuilding in the 70s.

Whyalla survived, but steel remained central to the city's fortunes, something that was made clear when former steelworks owner Arrium went into administration in 2016.

The city is now reaching the end point of its second steelworks administration in a decade.

"I came here in '79, and I can't remember ever having (an attitude of), 'Oh, gee, everything's great, and there's no problems,'" Mr Hilton said.

"It's always doom and gloom, but Whyalla's still here, and I'm sure it's still going to be here next year."

Local bicycle shop owner Wesley Fisher has also lived through turbulence in the town.

"I was at the mines around… 13 years ago and I was made redundant after five or six years out there," he said.

"We're on a low right now, but it will come back up again sooner or later."

Mr Fisher said his sales remained within "normal range"; an indication that the city's economy is still ticking despite uncertainty.

"More people are just talking about if the blast furnace is going to get going again or not, but we're all positive," he said.

"With the experience of all the workers we've got out here, we'll get the blast furnace going hopefully.

"It just feels like we're too big to fail, we'll sort it out, it'll get going again."

'The town's very unnerved'

But others in the community are not so sure.

Roger Jordan, a contractor who does work at the steelworks and associated mines, said Whyalla was "hanging on the end" of its seat.

"I think particularly the business community is getting very concerned about how things are proceeding," he said.

"The town's very unnerved."

Asked if the imminent sale of the steelworks gave Whyalla hope, Mr Jordan replied: "I think the phrase is pain before gain, but we really don't know who the buyer will be.

"A lot of the business folk don't know where they're going to be in the next few months, particularly in the transition period," he said.

"Work's thinning out for some of the contractors, and I think some of the contractors are going to find it pretty hard over the next few weeks."

Mr Koutsantonis said the number of jobs on the line in Whyalla depended "entirely on who the successful bidder is".

"They have very different programs and very different timescales," he said.

The treasurer said there would be a jobs "gap" between the blast furnace closing and a replacement technology — such as an electric arc furnace — being put in place.

He said "hundreds" of jobs would be affected.

"The question would be how many of them (blast furnace workers) can be allocated to other tasks around the steelworks, how many might go elsewhere, how many choose to retire, so I can't give you a number," Mr Koutsantonis said.

But he said that "as a whole" more people would end up being employed in Whyalla.

"Mining expansion plans one, two and three will actually see more employed there," he said.

"The steelworks might be more efficient and smaller, but that was always going to be the case anyway.

"What you might see is a small decrease in workforce while (there's) recapitalisation and a dramatic increase in workforce while it's being built, and then going back down again to a level sort of plateau as operations begin."